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The question is, in B, what exactly is the issue? I do not think the usage of each is wrong in B at all.."They were each.." = "They each were.."

IMO, the problem in B is the use of the word they which could mean both the documents and the people.

What do you think?

"each" in your second sentence is not operating as the subject. It's an adjective. We are basing the use of "are" or "is" on "they", not on "each". We're using "each" to modify "they". When used as an adjective, I "each" is still singular, but the word it modifies is plural.

Each presents several problems of agreement with verbs and pronouns. When the pronoun each is the subject, it normally takes a singular verb ("Each is unique"). When the adjective each modifies a singular noun subject, the singular verb is used ("Each car is equipped with radar"). Each of is followed by a plural noun or pronoun ("Each of the kittens was given to a different family," "Each of us asked one question"). When the adjective each follows a plural noun subject, a plural verb and plural pronoun commonly follow ("We each have our own concerns"). Each often takes a plural pronoun in reference, sometimes to avoid saying "his or her" ("Each person in the line had to show their ticket").

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------------------------------------J Allen Morris**I'm pretty sure I'm right, but then again, I'm just a guy with his head up his a$$.